SEC Said to Ask Banks to Explain Exchange-Traded Note Disclosure
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The U.S. Securities and Exchange Commission is asking whether banks are adequately explaining the risks of exchange-traded notes, a step toward its first new guidance for the market in almost eight years, according to people familiar with the matter.
The agency sent banks a letter earlier this month that focuses on fees they charge when issuing the notes, the values of the securities and how they are marketed, according to the people, who asked not to be identified because they weren’t authorized to speak publicly. ETNs are a type of bank debt traded on exchanges that use derivatives to wager on everything from gold and stocks to volatility indexes.